M7 Regional E-Warehouse REIT to restructure

M7 Regional E-Warehouse REIT has become the second group to de-list from IPSX as the real estate-focused stock exchange is wound down. M7 Regional E-Warehouse said it had concluded that it was “in the best interests” of the company and its shareholders to de-list from IPSX and to restructure the company and its subsidiaries into a private fund. Yesterday, Mailbox REIT announced that it would delist from the exchange and lose its REIT status. IPSX started winding down its business in September, claiming a “perfect storm of macro headwinds” had left it “unable to scale the platform at a rate which would have avoided this scenario”. M7 Regional E-Warehouse said it also intended to leave the REIT regime on its de-listing from IPSX but it did not believe that the loss of REIT status should result in any material additional tax liability. The group said increased cash pressures, including a 500+ basis point increase in the Sonia rate, plus a reduction in the fair value of its portfolio, would make it more difficult for the company to meet certain REIT conditions, with any such breach having as its likely consequence a tax penalty for the company. The news of the de-listing came as the firm issued an update on its Q3 trading. Non-executive chairman James Max said the business had continued to “demonstrate operational resilience against a challenging macro backdrop” with occupancy at 98.2% and gross rental income of £8.8m. The value of the group’s portfolio fell by 4.08% quarter-on-quarter to £101.8m, driven by a 35bps yield shift based on a lack of transactional evidence and continuing poor sentiment due to interest rate levels. Max added that the macro-economic uncertainty and high interest rate environment had caused a  “significant increase in financing costs” and that as such the directors had decided to pause dividend payments. To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews